Cirrus Killer? Cessna just doesn't get it...

Thomas Borchert wrote:

Jase,


Perhaps, but the point I'm trying to make is that regardless of the plane,
"Cessna" the brand isn't sexy.



Thanks! At last! What, pray, tell, is inherently good about Cessna? Let alone
"cool" or "sexy".


The good part is they make reliable airplanes that have stood the test
of time. They also have a world-wide support organization that few
other small airplane makers can match. That is the inherently good
part. As for cool and sexy, that is in the mind of the beholder, but I
think the Citation jets are both cool and sexy.


Matt

Matt,

Things could be phrased just a little differently he

The good part is they make reliable airplanes that have stood the test
of time.

The bad part is they have sat on their dollar-fat behinds for decades,
not taken any risks with developing new designs, blocked innovation and
milked everything they possibly could out of ancient, outdated designs
while...

They also have a world-wide support organization that few
other small airplane makers can match.


... conveniently excerting their monopoly-like power on a small market.

The above holds only for the piston market, of course, and is a
simplification - as much as your statements were.

I've said it befo We as a group can't complain all the time about
there being no development in this market and at the same time badmouth
every newcomer there is and standing fast with the old companies that
don't deliver the innovation. Cessna isn't looking into a new plane
because they WANT to, it's because they were MADE to - by Cirrus and
Diamond. Strong competition for Cessna is something we should ALL desire.
It makes them move - at long last. Their first try was just beginning to
offer "new" 50-year-old designs. It didn't work to squash Cirrus, so now
they're trying something else. Something at which Cirrus and Diamond
might well have way more experience.

--
Thomas Borchert (EDDH)

Thomas Borchert wrote:
Matt,

Things could be phrased just a little differently he


The good part is they make reliable airplanes that have stood the test
of time.


The bad part is they have sat on their dollar-fat behinds for decades,
not taken any risks with developing new designs, blocked innovation and
milked everything they possibly could out of ancient, outdated designs
while...

That is true with respect to their light airplanes, although the new
avionics are being fitted pretty much at the same pace as other
manufacturers. They have innovated a lot in the bizjet marketplace.
The reality is that the light plane business isn't all that lucrative.
It will be interesting to see if Cirrus survives longer term. I'm
guessing they won't, but hopefully they will get enough planes in the
market so that someone else will buy them and not leave them stranded a
la the Commander line and others.



They also have a world-wide support organization that few
other small airplane makers can match.



.. conveniently excerting their monopoly-like power on a small market.

The above holds only for the piston market, of course, and is a
simplification - as much as your statements were.

I've said it befo We as a group can't complain all the time about
there being no development in this market and at the same time badmouth
every newcomer there is and standing fast with the old companies that
don't deliver the innovation. Cessna isn't looking into a new plane
because they WANT to, it's because they were MADE to - by Cirrus and
Diamond. Strong competition for Cessna is something we should ALL desire.
It makes them move - at long last. Their first try was just beginning to
offer "new" 50-year-old designs. It didn't work to squash Cirrus, so now
they're trying something else. Something at which Cirrus and Diamond
might well have way more experience.

No, they want to. My guess is that making light planes is a losing
proposition for Cessna. From a purely business standpoint, they would
probably me money ahead if they had never re-entered the light plane
market. This is sad, but I'm guessing true. Cirrus is surviving on
OPM. It will be curious to see if their investors ever make money on
their investment.

How did Cessna try to squash Cirrus?


Matt

"Matt Whiting" wrote:
...
My guess is that making light planes is a losing
proposition for Cessna. From a purely business standpoint,
they would probably me money ahead if they had never
re-entered the light plane market. This is sad, but I'm
guessing true.

It is possible they make money too, as the light singles can share
some of the infrastructure in place to make and market the
profitable lines. However, Cessna is a small part of a big company
(Textron), and their financial statements by segment suggest only
that building Citations is certainly worthwhile even in bad years.
At the unit volume of piston singles, they may make some, or lose
some, and it's possible the Board of Directors cares little one way
or the other if Cessna managers have a rationale for their biz
model. As an inconsequential part of a big picture, I think it
erroneous to compare Cessna decision-making on the singles to that
of competitors who I think are all standalone companies and
nonpublic.

Fred F.

TaxSrv wrote:
"Matt Whiting" wrote:

...
My guess is that making light planes is a losing
proposition for Cessna. From a purely business standpoint,
they would probably me money ahead if they had never
re-entered the light plane market. This is sad, but I'm
guessing true.


It is possible they make money too, as the light singles can share
some of the infrastructure in place to make and market the
profitable lines. However, Cessna is a small part of a big company
(Textron), and their financial statements by segment suggest only
that building Citations is certainly worthwhile even in bad years.
At the unit volume of piston singles, they may make some, or lose
some, and it's possible the Board of Directors cares little one way
or the other if Cessna managers have a rationale for their biz
model. As an inconsequential part of a big picture, I think it
erroneous to compare Cessna decision-making on the singles to that
of competitors who I think are all standalone companies and
nonpublic.

Why? Most companies at least ostensibly exist to make a profit. Except
for the companies chartered specifically as not-for-profit, and even
some of them profit their managers quite nicely. :-)

Matt

"Matt Whiting" wrote:

Why? Most companies at least ostensibly exist to make a profit.

Matt

Sure, and Textron is profitable, but the impact of piston singles
on their financials is insignificant, perhaps less than 1% of their
$12 billion business. What I was trying to say is if they lose
money on singles, as you theorize and so might I, they can still
have a business reason to tolerate it and not uncommon in industry
at all. In their latest annual report, they mention the singles
only in passing, but as opposed to lengthy discussion of jets and
other product lines, they don't state the amount of "segment
profit" on the piston products. Maybe there ain't any?

Fred F.

TaxSrv wrote:
"Matt Whiting" wrote:

Why? Most companies at least ostensibly exist to make a profit.

Matt


Sure, and Textron is profitable, but the impact of piston singles
on their financials is insignificant, perhaps less than 1% of their
$12 billion business. What I was trying to say is if they lose
money on singles, as you theorize and so might I, they can still
have a business reason to tolerate it and not uncommon in industry
at all. In their latest annual report, they mention the singles
only in passing, but as opposed to lengthy discussion of jets and
other product lines, they don't state the amount of "segment
profit" on the piston products. Maybe there ain't any?

OK, I see what you were saying. I suspect it is mainly based on the
personal desires of some Cessna executives as well as a
marketing/strategic purpose to build brand loyalty in pilots early. I
don't think it was purely the airplanes themselves that catapulted
Cessna to the top of the bizjet market relatively quickly. I suspect it
was also at least partly due to all of the pilots trained in Cessna's
who now fly for, or own, many of the companies that fly Cessna jets.


Matt

"Matt Whiting" wrote:

Why? Most companies at least ostensibly exist to make a profit.

Matt

Sure, and Textron is profitable, but the impact of piston singles
on their financials is insignificant, perhaps less than 1% of their
$12 billion business. What I was trying to say is if they lose
money on singles, as you theorize and so might I, they can still
have a business reason to tolerate it and not uncommon in industry
at all. In their latest annual report, they mention the singles
only in passing, but as opposed to lengthy discussion of jets and
other product lines, they don't state the amount of "segment
profit" on the piston products. Maybe there ain't any?

Fred F.

"Matt Whiting" wrote in message
news
TaxSrv wrote:
"Matt Whiting" wrote:

...
My guess is that making light planes is a losing
proposition for Cessna. From a purely business standpoint,
they would probably me money ahead if they had never
re-entered the light plane market. This is sad, but I'm
guessing true.


It is possible they make money too, as the light singles can share
some of the infrastructure in place to make and market the
profitable lines. However, Cessna is a small part of a big company
(Textron), and their financial statements by segment suggest only
that building Citations is certainly worthwhile even in bad years.
At the unit volume of piston singles, they may make some, or lose
some, and it's possible the Board of Directors cares little one way
or the other if Cessna managers have a rationale for their biz
model. As an inconsequential part of a big picture, I think it
erroneous to compare Cessna decision-making on the singles to that
of competitors who I think are all standalone companies and
nonpublic.

Why? Most companies at least ostensibly exist to make a profit. Except
for the companies chartered specifically as not-for-profit, and even some
of them profit their managers quite nicely. :-)

Matt

Here are a few reasons Cessna might want to keep its piston single business:

1) Product support. As a seller of high end products (i.e. Citations), you
want your customers and prospective customers to believe you'll support them
down the road. So, you continue making and selling replacement parts for
"legacy" aircraft.

2) Since you're keeping the people, equipment, and facilities to manufacture
replacement parts, you might as well assemble some of those parts into
airplanes. After all, the guy who's gonna buy a Citation 10 years from now
needs a nice new airplane so he can get flight training.

3) Brand loyalty. The guy who learns to fly in a Cessna has a good chance of
moving up in the Cessna family of products. Hopefully to a Caravan or
Citation. So, sell him a new 182 as his first airplane, and sell him
something turbine driven after he makes it big with oil futures.

4) Maybe (maybe not) the piston single market will become *the hot thing*
one day. It's easier to capitalize on that opportunity if you're already in
the piston single business.

I just got a mailing from Cessna yesterday. Look here...
www.cessnareasons.com